Morgan Stanley and Galaxy Digital Link Crypto Lending to Bitcoin ETPs

Asset manager Morgan Stanley together with Galaxy Digital have announced a new referral arrangement in New York today that connects direct crypto holdings with regulated spot crypto exchange-traded products (ETPs).

According to the press release, this is built for eligible investors that has high net worths who want to hold digital assets like Bitcoin while also getting exposure to traditional investment products linked to those same assets

How does this work?

Clients can lend cryptocurrencies such as Bitcoin, Ether, and Solana to Galaxy Digital. In return, they receive shares of spot crypto ETPs, including products like the Morgan Stanley Bitcoin Trust (MSBT), which is offered by Morgan Stanley Investment Management.

This means a client does not need to fully exit crypto to move into a regulated product. Everything is linked through a structured system where crypto is lent, checked, and then converted into ETP shares through an official market process.

Morgan Stanley’s role in the process

Morgan Stanley said it will provide clients with education on digital assets and refer them to Galaxy Digital for execution.

Once a client submits eligible crypto assets, Galaxy will assess whether the loan can be settled through ETP creation. If it is approved, Galaxy works with an authorized participant to complete an in-kind creation. Once this is done, the ETP shares are sent directly into the client’s chosen account.

Faster onboarding for investors

According to the release, onboarding time has been a major issue in similar transactions. Normally, onboarding for this kind of crypto-to-ETP process can take more than four weeks. However, this new arrangement could reduce the tim up to 75% in some cases. That means what used to take weeks may now take only a few days in some situations. 

At the same time, Galaxy has lowered its minimum lending size for Morgan Stanley-referred clients from $25 million to $5 million. This does not make it open to everyone, but it does widen access for more qualified investors who were previously locked out.

The system is also designed to fit into normal wealth management services. Clients who already use tools like margin, lending, and portfolio services can now include crypto in a similar way. Instead of treating crypto as something separate, it becomes part of a larger investment plan.

This is important for investors who want exposure to crypto but prefer to keep it inside regulated financial products instead of managing wallets and private keys on their own.

Morgan Stanley said this is part of its ongoing work in digital assets.  Alison Nest, Head of Investment Solutions Products at Morgan Stanley Wealth Management, said, “Morgan Stanley has been investing in the DeFi space for some time, and we are proud to support a referral capability with Galaxy to provide Wealth Management clients with an institutionalized pathway that helps integrate digital assets into their portfolio.”

She added that the arrangement helps bridge traditional finance and decentralized finance while giving investors smoother access to diversification tools.

Crypto becomes part of traditional investing

Behind all of this is a bigger shift in how crypto is being treated in finance. Instead of being only something you trade or hold directly, it is now being built into structured products like ETPs, lending systems, and portfolio strategies.

In this arrangement, Galaxy handles the crypto lending and conversion side, while authorized participants help turn those assets into ETP shares that can sit inside normal investment accounts.

Also Read: Grayscale Pushes Canton Coin ETF in New Filing With SEC

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